Cubist Pharmaceuticals (CBST) Acquired By Merck (MRK)

The board of Merck & Co., Inc. (MRK) agreed on Monday to buy Lexington, Massachusetts-based Cubist Pharmaceuticals Inc. (CBST), a maker of antibiotics, for about $8.4 billion in cash, the company announced in a statement.

Merck, the second-biggest U.S. drugmaker, would pay $102 per share in cash, representing a 35-percent premium over Cubist’s closing share price on Dec. 5.

“Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines,” said Kenneth C. Frazier, chairman and CEO of Merck. “Combining this expertise with Merck’s strong capabilities and global reach will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance.”

Merck said it expects the transaction to add more than $1 billion of revs to its fiscal 2015 base. While the deal will be neutral to non-GAAP EPS in FY’15, Merck expects it to be significantly accretive to non-GAAP EPS in FY’16 and beyond.

Cubist surged as much as 36% to $101.11 in pre-market trading Monday, while Merck climbed 11 cents, or 0.18% to $61.60.

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